How to calculate real estate inventory

[Manuel Sarabia]

Whenever I hear a speaker talk about the real estate market they go into the amount of supply available for 2-3 months. How do I calculate how much inventory will be available in the foreseeable future based on current inventory numbers?

[Account Closed]

They're talking about absorption rate, which is basically the # of houses for sale divided by the # of sales per month. Not how many houses will be available next month.

ie if there's 100 houses for sale and 50 houses sell each month, there's 2 months supply.

That helps you figure out which areas sell faster than others. Some areas will have much slower absorption rates than others due to low desirability.